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SDS (Seductive Dividend Stocks)
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Sorry I hide my true identity but I'm a physicist/engineer, native contrarian and idea generator. SA photo reflects my soul quite well. I am an eclectic dividend investor with motto "In God We Trust, All Others Pay Cash" applied to companies I invest in. I like to read /and read a lot... More
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  • Will we see dividend cuts (Nov 6, 2011)? 4 comments
    Nov 8, 2011 11:36 AM
    Recently Jeff Paul published 2-parts report "Why Dividend Growth Investors Should Not Ignore Stock Prices" ( see seekingalpha.com/article/299601-why-divi...) where he found correlations between S&P500 and stock prices. He "analyzed 56 stocks that cut their dividend and observed that for 75% of them, their stock price underperformed the S&P 500 (SPY) by 20% (2000 basis points) within 12 months of the dividend cut announcement."

    He wrote also "I looked at one-year charts starting from five years ago (Oct 10, 2006), and recorded the date if I observed a 4-week -20% gap. In some cases where I could see larger price swings, I altered the starting month to capture that change, since an investor would likely be performing this test on a monthly or quarterly basis."

    If Jeff Paul is right - I think it is worst to perform this test   on a monthly or quarterly basis. Fortunately FINVIZ.com provide data for monthly and  quarterly performances
    of US stocks and ETF. I compared these performances of David Fish's CCC list with performance of SPY (ETF for   S&P500) as reported 11/6/2011 and found that the following stocks underperformed the S&P 500 by 20% 

    Contenders
    NWFL
    AVP
    HIFS
    Challengers
    DV
    AM
    ACI
    ITT
    STRA
    BMRC

    Will they cut dividends? I don't know - let's see in 1 year.
      
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  •  
    In what month/date do you find the -20% spread for NWFL and HIFS? When I looked at their charts in Google Finance vs. SPY, I don't see more than a 15% difference. If you started in August, HIFS has been bumping against the 20% limit (SPY has increased, but HIFS has not), but it has not sustained it for 4 consecutively weekly returns. This is where the monthly reading differs from my system, as it is a single point in time, and if HIFS happens to be under 20% that day, it will trigger the rule. I restart the count every time it goes back above -20%, which means it has to consistently stayed below that limit before I call it a "sell". It will be interesting to see how the results differ. HIFS just increased its special dividend though, so looks like no cut.
    10 Dec 2011, 04:16 PM Reply Like
  •  
    I tried to find a shortcut for your idea (to save time) and used data for monthly and quarterly performances from FinViz.com at 11/6/2011. I didn't check for 4 consecutively weekly returns.
    FinViz has also Performance (Week) but I didn't check each week, it was just one spot review based on monthly and quarterly data.
    A simple Excel macro can be /and should be/ written to collect weekly data for all CCC (or another set of stocks).
    10 Dec 2011, 05:59 PM Reply Like
  •  
    I commented Jeff's article
    A Stop-Loss Strategy For Dividend Growth Stocks as
    Jeff,
    Good article, thanks!
    In addition to list I sent you couple month ago following stocks are suspicious for -20% signal

    AINV
    BDMS
    BSI
    CBK
    HAS
    KEQU
    MDC
    NYB
    OTT
    PTNR
    RRD
    SFL
    TRI
    VALU

    but I didn’t check except NYB.

    SDS
    25 Jan 2012, 09:07 AM Reply Like
  •  
    I briefly check the stocks I mentioned early with companies in David Fish's CCC list (ver 4/30/13) and dividata.com graphs:

    NWFL HIFS DV BMRC BDMS HAS TRI - continue DG (they are in the CCC list);
    ACI AVP OTT VALU ITT AINV BSI PTNR - did cut dividends (note: OTT did it in quite "fancy" style);
    AM STRA CBK KEQU MDC NYB RRD- froze dividends (MDC paid special div at the end of 2012);
    SFL - unclear dividends history.

    I didn't check prices of these stocks this time.

    SDS
    1 May, 02:48 AM Reply Like
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